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Rising DUC Inventory and Oilfield Services’ Demand

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Apr. 11 2019, Published 7:07 a.m. ET

Rising DUC inventory

The inventory of DUC (drilled but uncompleted) wells has been rising for two years. The number of drilled but uncompleted wells has risen steadily from 5,272 in November 2016 to 8,576 in February 2019. The biggest rise was in the Permian Basin’s DUC inventory. The DUC wells more than tripled in two years in the Permian Basin.

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Permian Basin DUC inventory

The number of DUC wells by basin is shown in the above graph. Takeaway capacity constraints have contributed to the rising inventory of uncompleted wells in the Permian Basin. Quite a few pipeline projects are under construction to address the takeaway constraints in the region. The major pipeline projects connecting Permian production to the markets are expected to become operational by the end of 2019 or in 2020. So, the capacity constraints are expected to persist over the next few quarters, which might impact Schlumberger’s (SLB) first-quarter results.

As the projects to transport the rising oil and gas production come into service, the Permian Basin might see increased completions activity. Higher demand for completions services bodes well for oilfield services companies including Schlumberger, Halliburton (HAL), Baker Hughes (BHGE), and TechnipFMC (FTI).

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